Clearing the decks for FDI
Wednesday, 22 August 2007
Syed Fattahul Alim
FOR a country not blessed with abundant natural resources of different kinds including copper, iron, uranium, silver, gold, diamond or huge hydrocarbon deposits in the form of black gold, that is, oil, Bangladesh's development discourse obviously lacks the glamour of the Middle East, or some African and South American nations. Big international investors are naturally drawn towards such countries. So, countries like Bangladesh can hardly blame the international companies with money and technology, if they fail to show much interest in Bangladesh as far as big investment is concerned. But then it is not just the lack of vast deposits of natural treasures that has come in the way of massive foreign investment in Bangladesh. There are also other reasons rooted in the socio-political conditions.
The reasons for this are well-known and many. The first and foremost is the infamy the country had earned as a land of periodic political uncertainty. However, an effort at the moment is on to remove that blemish from the nation's lot. Corruption is another disgrace against which the incumbent caretaker government has been launching a crusade since its assumption of power. The international watchdog body, Transparency International, too, had on more than one occasion claimed Bangladesh to be the most corrupt nation on a global scale. Unfortunately, this is an instance of overkill, because overexposure to any criticism, branding and blaming may sometimes kill rather than cure the subject in question. Many well-meaning foreign business houses have shied away from doing any business with Bangladesh, for the simple reason that spiteful reports on its corruption-ridden government offices and seaports were sent directly to their boardrooms before any business deals could mature.
This is a cautionary note against becoming an easy prey to prowlers always on the look out for an easy game. This is especially true of countries with few safeguards. However that may be, there is no denying the truism that there should be no mercy about taking the bull of corruption by the horns at home. At the same time, one must also handle the issue in such a manner that too much reprimanding whether internally or externally may not turn into its own nemesis.
But one cannot still say that Bangladesh is a land forgotten by the international business community, because we have few resources tucked away underneath the surface of the earth or that it has become an international whipping boy or pariah due to negative branding from within or without. In spite of everything, a good number of well-known multinational business groups have been showing keen interest in making sizeable investments in Bangladesh. Some globally renowned companies are already operating in the gas and energy sector. Meanwhile, large international business conglomerates including the Indian steel giant Tata, the UK-based Indian-origin conglomerate dealing in steel Mittal group, the British multi-national giant Asia Energy, the Korean company Global Luxen and US-based Volcan Energy, among others, have been waiting for the government's nod to start their venture in Bangladesh. The immediate past alliance government made unnecessary delay over settling the deal with Tata, which came up with a proposal worth USD 3.5 billion to build a steel mill, a power plant and a fertiliser factory. The whole deal hit the snag over the fixing the price of gas for Tata and setting the guarantee period for the company to get the gas at the preferential price. Meanwhile, a big controversy arose among the experts, civil society members and various stakeholders over whether Bangladesh should allow foreign companies to use Bangladesh's only major natural resource, gas, at a giveaway price over a long period of time. At a stage, the representatives of the Tata group had even withdrawn their investment proposal blaming it all on the inordinate delay of the government in reaching a decisions on its investment proposal. Later, the Tata group again returned with a revised and bigger investment proposal. Meanwhile, the alliance kept waiting with an eye to the next parliamentary election.
Since January 2008, seven months have already passed. No decision could so far be taken on these proposals from the government's side for understandable reasons. The proposal worth USD 2.9 billion from the Mittal group, however, is a new one. In a similar fashion, the Asia Energy's investment offer is worth USD 2.8 billion. The total value of the investment offers made by these industrial giants is about USD 12 billion. Given the not-so-investment-friendly track record of Bangladesh as recounted in the foregoing, it must be admitted that such huge size of foreign investment proposals speaks of another Bangladesh that has not missed the attention of some large overseas business houses.
However, these foreign companies are certainly aware that an interim government has its limitations. And, these are very reasonable grounds for the lack of any progress over these investment proposals thus far. At the same time, we must also appreciate that the said foreign companies continue to consider Bangladesh in a positive light.
Notwithstanding these ground realities for the lack of tangible progress in the business deals waiting to be clinched, it would not also be wise to ignore yet other realities that propel the world of business. For international business has its own dynamics and its centre of gravity often shifts in step with the developments in other parts of the world.
One cannot therefore expect that the foreign investors would wait indefinitely at our doorstep with their bagfuls of money for the opportune moment of investment to come.
What the former executive chairman of the Board of Investment (BoI), Nazrul Islam, has said on this score is very significant. He said that regardless of all that has happened, the country is sending a wrong signal to the business community abroad. If the syndrome of delay in decision-making continues, it is feared that Bangladesh's prospect as a destination of Foreign Direct Investment (FDI) may suffer irreversibly. The immediate past head of BoI, told about his experience how the Non-Resident Bangladeshis(NRBs) as well as prospective foreign investors had shown their keen interest about Bangladesh when he toured different countries during his tenure in service.
The incumbent interim administration has its hands already filled with too many jobs. Even then it cannot be said that the issue of clearing the decks for the intending investors who have already placed their proposals for investment is one task too many for the incumbent administration. So, decision should come without delay on the investment proposals already waiting on the table. At the same time, the drive to woo overseas investors must also remain alive no matter what form of government is in office at a particular point of time.
FOR a country not blessed with abundant natural resources of different kinds including copper, iron, uranium, silver, gold, diamond or huge hydrocarbon deposits in the form of black gold, that is, oil, Bangladesh's development discourse obviously lacks the glamour of the Middle East, or some African and South American nations. Big international investors are naturally drawn towards such countries. So, countries like Bangladesh can hardly blame the international companies with money and technology, if they fail to show much interest in Bangladesh as far as big investment is concerned. But then it is not just the lack of vast deposits of natural treasures that has come in the way of massive foreign investment in Bangladesh. There are also other reasons rooted in the socio-political conditions.
The reasons for this are well-known and many. The first and foremost is the infamy the country had earned as a land of periodic political uncertainty. However, an effort at the moment is on to remove that blemish from the nation's lot. Corruption is another disgrace against which the incumbent caretaker government has been launching a crusade since its assumption of power. The international watchdog body, Transparency International, too, had on more than one occasion claimed Bangladesh to be the most corrupt nation on a global scale. Unfortunately, this is an instance of overkill, because overexposure to any criticism, branding and blaming may sometimes kill rather than cure the subject in question. Many well-meaning foreign business houses have shied away from doing any business with Bangladesh, for the simple reason that spiteful reports on its corruption-ridden government offices and seaports were sent directly to their boardrooms before any business deals could mature.
This is a cautionary note against becoming an easy prey to prowlers always on the look out for an easy game. This is especially true of countries with few safeguards. However that may be, there is no denying the truism that there should be no mercy about taking the bull of corruption by the horns at home. At the same time, one must also handle the issue in such a manner that too much reprimanding whether internally or externally may not turn into its own nemesis.
But one cannot still say that Bangladesh is a land forgotten by the international business community, because we have few resources tucked away underneath the surface of the earth or that it has become an international whipping boy or pariah due to negative branding from within or without. In spite of everything, a good number of well-known multinational business groups have been showing keen interest in making sizeable investments in Bangladesh. Some globally renowned companies are already operating in the gas and energy sector. Meanwhile, large international business conglomerates including the Indian steel giant Tata, the UK-based Indian-origin conglomerate dealing in steel Mittal group, the British multi-national giant Asia Energy, the Korean company Global Luxen and US-based Volcan Energy, among others, have been waiting for the government's nod to start their venture in Bangladesh. The immediate past alliance government made unnecessary delay over settling the deal with Tata, which came up with a proposal worth USD 3.5 billion to build a steel mill, a power plant and a fertiliser factory. The whole deal hit the snag over the fixing the price of gas for Tata and setting the guarantee period for the company to get the gas at the preferential price. Meanwhile, a big controversy arose among the experts, civil society members and various stakeholders over whether Bangladesh should allow foreign companies to use Bangladesh's only major natural resource, gas, at a giveaway price over a long period of time. At a stage, the representatives of the Tata group had even withdrawn their investment proposal blaming it all on the inordinate delay of the government in reaching a decisions on its investment proposal. Later, the Tata group again returned with a revised and bigger investment proposal. Meanwhile, the alliance kept waiting with an eye to the next parliamentary election.
Since January 2008, seven months have already passed. No decision could so far be taken on these proposals from the government's side for understandable reasons. The proposal worth USD 2.9 billion from the Mittal group, however, is a new one. In a similar fashion, the Asia Energy's investment offer is worth USD 2.8 billion. The total value of the investment offers made by these industrial giants is about USD 12 billion. Given the not-so-investment-friendly track record of Bangladesh as recounted in the foregoing, it must be admitted that such huge size of foreign investment proposals speaks of another Bangladesh that has not missed the attention of some large overseas business houses.
However, these foreign companies are certainly aware that an interim government has its limitations. And, these are very reasonable grounds for the lack of any progress over these investment proposals thus far. At the same time, we must also appreciate that the said foreign companies continue to consider Bangladesh in a positive light.
Notwithstanding these ground realities for the lack of tangible progress in the business deals waiting to be clinched, it would not also be wise to ignore yet other realities that propel the world of business. For international business has its own dynamics and its centre of gravity often shifts in step with the developments in other parts of the world.
One cannot therefore expect that the foreign investors would wait indefinitely at our doorstep with their bagfuls of money for the opportune moment of investment to come.
What the former executive chairman of the Board of Investment (BoI), Nazrul Islam, has said on this score is very significant. He said that regardless of all that has happened, the country is sending a wrong signal to the business community abroad. If the syndrome of delay in decision-making continues, it is feared that Bangladesh's prospect as a destination of Foreign Direct Investment (FDI) may suffer irreversibly. The immediate past head of BoI, told about his experience how the Non-Resident Bangladeshis(NRBs) as well as prospective foreign investors had shown their keen interest about Bangladesh when he toured different countries during his tenure in service.
The incumbent interim administration has its hands already filled with too many jobs. Even then it cannot be said that the issue of clearing the decks for the intending investors who have already placed their proposals for investment is one task too many for the incumbent administration. So, decision should come without delay on the investment proposals already waiting on the table. At the same time, the drive to woo overseas investors must also remain alive no matter what form of government is in office at a particular point of time.